The Hindu Business Line : Unions only pursue membership privileges

CEOs’ enormous salaries and perks have rightly come under public scrutiny;, unions too seem to be fighting for the benefits for their own members paying little attention to the larger interests of society. So it is not surprising that unions rarely take up issues such as child labour or expanding employment opportunities which will increase their membership.

C. Gopinath

News of CEOs and other members of the top management team who seem to pay themselves enormous sums as compensation often reinforces the popular image of the greedy corporation.

We miss the point that in these situations, the corporation and its owners (the stockholders) are often not the beneficiaries, but their agents, the top managers, who leverage their positions of influence for personal benefit.

If you think this is unique, look no further than the union. Here is another group that has been working hard to build a reputation of maximising member privileges by exploiting its power. The union, originally formed to protect the rights of their members in the face of predatory owners, seems to have settled down to a role of fighting for their benefits even to the detriment of the organisation and also perhaps to the exclusion of society’s benefit.

Auto workers union

The United Auto Workers (UAW) is the dominant union of the automobile industry in the US. Towards the end of September, its members were engaged in continuing negotiations with General Motors to renew their contract. Their stance with GM, the first company with whom they engaged in negotiations this year, was to be a forerunner for the industry.

All the three major US automakers are in deep financial trouble and are looking to see what concessions they can get from the union to help put their companies into a more stable position for the future.

A significant element of the companies’ high-cost structure is the retirement benefits (especially health costs for retirees) that the companies have agreed to with the union in the past, when the times were good. However, in the absence of a state-regulated health-care system, private corporations have been searching for ways to shift the cost of the benefit away from their income statements, or at least to contain this expense.

The 73,000-member union did respond and, after a two-day strike to flex its muscles, negotiated a deal with the company. The deal was that the union will take on the responsibility of administering retiree healthcare, for which the company will make them a one-time payment covering a significant part of the estimated costs.

The deal also guarantees security and benefits for current employees, but allows the company to pay significantly lower wages for similar jobs to those hired in the future.

The union had secured benefits for its current membership, sacrificing the interests of future members, and, in the process, created a class system within the organisation for the workers. Unions have learnt their lessons from the CEOs. If you have the power to secure your benefits while sacrificing others, do so.

French protests

We cannot talk about unions and strikes without failing to mention France. For the French, the right to strike is right up there, along with liberty, fraternity and the other glorious rights that they value in life. So, even as I write this, the French trade unions are on a national strike paralysing public transport.

Railway staff and other public servants are protesting against the effort of President Nicolas Sarkozy, who wants to reform the generous retirement packages public servants receive, such as being able to retire with full benefits at 50, while most French workers have to wait till 60.

The strike has stranded travellers and delayed commuters across the country. A poll found that 55 per cent of the citizens felt that the strike was unjustified, a statistic that seems to have missed the union leadership completely. French unions have so fine-tuned the art of securing their own benefits that they have sacrificed the economy. Employers prefer to expand elsewhere, keeping unemployment high.

The disease seems to be spreading to other public employees in Europe. A minority union of train drivers in Germany’s state railways, representing only about 3 per cent of the workforce, are also on strike, demanding almost 31 per cent increase in their wages. They not only stranded passengers but, by holding up freight traffic, managed to shut down factories, affecting many other industries.

Competing to inconvenience the public, the employees of Air France, a private corporation, went on strike not too long ago, leaving travellers stranded at airports around the country. They wanted better terms from their management.

Police union

The police union in the state of Massachusetts is another group that knows to exploit its power and influence.

At various construction sites on the road (such as road- or pipe-laying) there is a need for someone to flag the traffic down to a slow pace, or to assist the traffic moving in both directions in sharing the reduced width of the road. In most such situations elsewhere, the construction crew would stick a red flag in the hand of their least productive worker. But not in Massachusetts!

Here, the police union has managed to have it written into its contracts that there is need for a policeman to regulate the traffic in such situations. This means that the policeman, while standing around looking bored, makes about $35 (Rs 1,365) an hour as overtime instead of the $12 (Rs 468) an hour it should cost the contractor.

Since the cost ultimately gets passed on to the state, a research institute has calculated that, by being tough with the union and deleting this privilege, the state can save about $52 million (Rs 203 crore) a year.

No governor has been able to get the union’s members to change their minds. The present governor wants to try. Get ready for a strike.

Writers Guild

In the continuing battle between unions and management, where the competition is to see who is more selfish, I finally found a situation where I can also benefit. The Writers Guild of America (WGA), the people who write the scripts for all those television programmes that keep us glued to the box, are also on strike against the studios, networks, and media conglomerates who employ their members.

The12,000 members of the union struck work because they wanted to receive a higher share of DVD sales revenues of shows that they scripted, and also want a share of the revenues when any film and TV shows are downloaded off the Internet. They are making sure that new methods of distributing their work (‘new media’) are also covered in their contract.

Thanks to the strike, no new shows are being produced, the channels keep repeating old shows, and finally it dawned on me what a waste it was anyway to sit in front of the TV, and I have managed to get to do other things that I had been putting off. Thanks, WGA and the networks. Please keep up the strike.

If we go back to the start of industrialisation, we can see how important it was to support and protect the right of workers to form a union in order to safeguard their bargaining power.

The behaviour of many industrialists made one want to cheer every time there was a strike. Even today, you see children being employed in sweatshops by factory owners who should know better. But you don’t see a union fighting for the rights of the workers in those units, though concerned civic groups usually take the help of the police to bring relief to the harried workers.

The unions, these days, are too busy safeguarding their incongruous privileges, and we seem to be back where we began about creating a responsible and responsive workforce.

How come unions do not think of working to expand employment opportunities so they can ultimately increase their membership? And is it too much to expect unions of public employees not to hold the public to ransom?

(The author is a professor of international business and strategic management at Suffolk University, Boston, US. He can be reached at cgopinat@suffolk.edu)

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